nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒12‒14
twenty-two papers chosen by
Vassilis Monastiriotis
London School of Economics

  2. Dots to boxes: Do the size and shape of spatial units jeopardize economic geography estimations? By Anthony Briant; Pierre-Philippe Combes; Miren Lafourcade
  3. Human Capital and New Firm Formation By Karlsson, Charlie; Backman, Mikaela
  4. Spatial Shift-Share Analysis of the Leisure and Hospitality Sector on the Gulf Coast following Hurricane Katrina By Evans, Garen
  5. Smooth-car mixed models for spatial count data By Dae-Jin Lee; Maria Durban
  6. Disparidades económicas regionales: un análisis de la distribución espacial de la población y del desempeño económico en Colombia By Joaquín Mauricio Zuleta Arango; Lisandro López Marin; Daniel Sánchez García
  8. Spatial Variability of Tourism Demand and Differences in Economic Impact in a Rural Economic Development Context By Das, Biswa R.; Rainey, Daniel V.
  9. The Slow Decline of East Germany By Harald Uhlig
  10. A Generalised Variable Elasticity of Substitution Model of New Economic Geography By Sylvain Barde
  11. An Exploration of Local R&D Spillovers in France By Jacques Mairesse; Benoit Mulkay
  12. Intermunicipal cooperation and privatization of solid waste services among small municipalities in Spain By Germà Bel; Melania Mur
  13. SPATIOTEMPORAL MODELING OF AGRICULTURAL YIELD MONITOR DATA By Nistor, Adela; Florax, Raymond J.G.M.; Lowenberg-Deboer, Jess; Brown, Jason P.
  14. What Drives the Productive Efficiency of a Firm? The Importance of Industry,Location, R&D, and Size By Stephan, Andreas; Badunenko, Oleg; Fritsch, Michael
  15. Transaction Costs in Housing Markets By Jos van Ommeren
  16. Entrepreneurial Communities in Rural Oklahoma By Brooks, Lara; Whitacre, Brian; Muske, Glenn; Woods, Mike
  17. The Key to Stabilizing House Prices: Bring Them Down By Dean Baker
  18. Car ownership and the Labor Market of Ethnic Minorities By Pieter A. Gautier; Yves Zenou
  19. Transmisión regional de la política monetaria en Colombia By Julio Romero P
  20. Endogenous Transport Prices and Trade Imbalances By Olaf Jonkeren; Erhan Demirel; Jos van Ommeren; Piet Rietveld
  21. Workers' marginal costs of commuting By van Ommeren , Jos; Fosgerau, Mogens
  22. Debt Capitalization: A New Perspective on Ricardian Equivalence By David Stadelmann; Reiner Eichenberger

  1. By: Brown, Jason P.; Florax, Raymond J.G.M.; McNamara, Kevin T.
    Abstract: The paper starts with a discussion of a conceptual model of location factors in U.S. manufacturing investment at the state level. The purpose of the paper is to test the relative importance of growth factors influencing investment and whether or not they have changed in importance over time. These factors include agglomeration, market structure, labor, infrastructure, and fiscal policy. A better understanding of investment flows in the manufacturing sector will help determine how growth factors have changed over time and which economic development policies may be most appropriate at targeting the sector. The analysis covers the time period 1994 to 2006 for the 48 contiguous states, with data taken from the Annual Survey of Manufactures, the Bureau of Economic Analysis, and the Bureau of Labor Statistics. Panel methods are used to test for fixed effects due to heterogeneity across states. Spatial panel methods with time effects are used for determination and specification of spatial and temporal effects. Empirical results are consistent across the empirical models put forth. Results suggest that market demand remains one of the most important location factors of manufacturing investment. Investment also goes to states with more productive labor and localized agglomeration of manufacturing activity.
    Keywords: manufacturing, investment, location factors, Community/Rural/Urban Development, L60, R11, R30,
    Date: 2008–08
  2. By: Anthony Briant; Pierre-Philippe Combes; Miren Lafourcade
    Abstract: This paper evaluates, in the context of economic geography estimates, the magnitude of the distortions arising from the choice of zoning system, which is also known as the Modifiable Areal Unit Problem (MAUP). We consider three standard economic geography exercises (the analysis of spatial concentration, agglomeration economies, and trade determinants), using various French zoning systems differentiated according to the size and shape of spatial units, which are the two main determinants of the MAUP. While size matters a little, shape does so much less. Both dimensions seem to be of secondary importance compared to specification issues.
    Date: 2008
  3. By: Karlsson, Charlie (Jönköping International Business School); Backman, Mikaela (Jönköping International Business School)
    Abstract: This paper investigates the impact human capital has on new firm formation, traditionally expected to have a positive influence. Individuals are attracted to regions with a stimulating atmosphere and tend to stay within the same region. Since human capital is partly spatially bounded, the size of municipality accessibility to human capital is expected to have a larger impact than intra-regional and inter-regional interaction. The empirical analysis is based on data on new firm formation at the municipality level in Sweden and accessibility to human capital, defined as minimum three years at tertiary level. The new firm formation is both measured in absolute and in relative terms. In the analysis, the municipalities are divided into four groups; (i) all municipalities, (ii) central municipalities (ii) municipalities within the hinterland in large functional regions and (iii) municipalities within the hinterland in small functional regions. This is done to make the comparison easy. The results indicate that it is the local market, measured as the size of the municipality accessibility to human capital that has a positive impact on new firm formation. Income per capita has a positive impact and average firm size has a negative impact on new firm formation.
    Keywords: human capital; new firm formation; municipalities; accessibility; Sweden
    JEL: L26 R11
    Date: 2008–04–03
  4. By: Evans, Garen
    Abstract: Employment shifts in the Leisure and Hospitality sector along the Gulf coast following Hurricane Katrina were explored using spatial shift-share analysis. Using a spatial weights matrix that incorporated relative employment, and distance measures relative to the track of the storm we calculated classical and spatial shift-share components. Each of the spatial components then was regressed on net employment change, and the results were statistically significant, and similar to results obtained by Marquez and Ramajo (2005). These results suggest that spatial interaction between employment centers as well as with the storm track, was a relevant aspect of the employment shifts that occurred following Hurricane Katrina.
    Keywords: Labor and Human Capital, Research Methods/ Statistical Methods, R11, R12, J21,
    Date: 2008
  5. By: Dae-Jin Lee; Maria Durban
    Abstract: Penalized splines (P-splines) and individual random effects are used for the analysis of spatial count data. P-splines are represented as mixed models to give a unified approach to the model estimation procedure. First, a model where the spatial variation is modelled by a two-dimensional P-spline at the centroids of the areas or regions is considered. In addition, individual area-effects are incorporated as random effects to account for individual variation among regions. Finally, the model is extended by considering a conditional autoregressive (CAR) structure for the random effects, these are the so called “Smooth-CAR” models, with the aim of separating the large-scale geographical trend, and local spatial correlation. The methodology proposed is applied to the analysis of lip cancer incidence rates in Scotland.
    Keywords: Mixed models, P-splines, Overdispersion, Negative Binomial, PQL, CAR models, Scottish lip cancer data
    Date: 2008–11
  6. By: Joaquín Mauricio Zuleta Arango; Lisandro López Marin; Daniel Sánchez García
    Abstract: RESUMEN El presente artículo estudia la evolución de las disparidades económicas regionales a partir de la forma como se configura la distribución de la población y del desempeño económico en las “regiones económicas” de Colombia para el periodo 1975-2000. Se evidencia una fuerte y persistente concentración espacial del progreso económico y de la población en el centro del país de espaldas a la periferia. Se comenta la importancia de un proceso de descentralización económica destinado a la determinación de posibles alternativas de política regional que potencie las capacidades endógenas de cada territorio y fomente la competitividad territorial. ABSTRACT The present article studies the evolution of the regional economic disparities from the form as the distribution of the population and the economic performance in the “economic regions” of Colombia for period 1975-2000 is formed. A strong and persistent space concentration of the economic progress and the population located in the middle of the country of backs to the periphery is showed, which prevents an equitable territorial development. From this, the importance of a process of economic decentralization like departure point for the determination of possible alternatives of regional policy that comments it harnesses the endogenous capacities of each territory and foment territory competitiveness.
    Date: 2008–01–27
  7. By: Lambert, Dayton M.; Florax, Raymond J.G.M.; Cho, Seong-Hoon
    Abstract: This research note documents estimation procedures and results for an empirical investigation of the performance of the recently developed spatial, heteroskedasticity and autocorrelation consistent (HAC) covariance estimator calibrated with different kernel bandwidths. The empirical example is concerned with a hedonic price model for residential property values. The first bandwidth approach varies an a priori determined plug-in bandwidth criterion. The second method is a data driven cross-validation approach to determine the optimal neighborhood. The third approach uses a robust semivariogram to determine the range over which residuals are spatially correlated. Inference becomes more conservative as the plug-in bandwidth is increased. The data-driven approaches prove valuable because they are capable of identifying the optimal spatial range, which can subsequently be used to inform the choice of an appropriate bandwidth value. In our empirical example, pertaining to a standard spatial model and ditto dataset, the results of the data driven procedures can only be reconciled with relatively high plug-in values (n0.65 or n0.75). The results for the semivariogram and the cross-validation approaches are very similar which, given its computational simplicity, gives the semivariogram approach an edge over the more flexible cross-validation approach.
    Keywords: spatial HAC, semivariogram, bandwidth, hedonic model, Community/Rural/Urban Development, Demand and Price Analysis, Land Economics/Use, Research Methods/ Statistical Methods, C13, C31, R21,
    Date: 2008
  8. By: Das, Biswa R.; Rainey, Daniel V.
    Abstract: Statistically predicted future tourism demand is used to conduct an economic impact analysis in twelve tourism zones in the state of Arkansas. The analysis reveals spatial variability in employment, and output growth that will continue into the future. Tourism has the potential as an economic growth engine for the state, especially in economically disadvantaged regions with long-term benefits.
    Keywords: Tourism Demand, Economic Impact Analysis, Rural Development, Community/Rural/Urban Development, Resource /Energy Economics and Policy, R15, R58,
    Date: 2008
  9. By: Harald Uhlig
    Abstract: Fifteen years after German reunification, the facts about slow regional convergence have born out the prediction of Barro (1991), except that migration out of East Germany has not slowed down. I document that in particular the 18-29 year old are leaving East Germany, and that the emigration has accelerated in recent years. I document that low wages, high unemployment and increasing reliance on social security persist across wide regions of East Germany together with these migration patterns. To understand these patterns, I use an extension of the standard labor search model introduced in Uhlig (2006, 2008) by allowing for migration and network externalities. In that theory, two equilibria can result: one with a high networking rate, high average labor productivity, low unemployment and no emigration ("West Germany'') and one with a low networking rate, low average labor productivity, high unemployment and a constant rate of emigration ("East Germany''). The model does not imply any obviously sound policies to move from the weakly networked equilibrium to the highly networked equilibrium.
    JEL: E20 J61 J64 O11 O18 O33 P20 P25 R12 R23
    Date: 2008–12
  10. By: Sylvain Barde (Observatoire Français des Conjonctures Économiques)
    Date: 2008
  11. By: Jacques Mairesse; Benoit Mulkay
    Abstract: This paper is an attempt to assess the existence and magnitude of local research spillovers in France. We rely on the model of an extended production function (Cobb-Douglas and Translog) with both local and neighborhood R&D capital stocks. We estimate this model on 312 employment areas as of 1999, first for the whole economy, then separately for five large manufacturing industries. The estimated elasticities of productivity with respect to R&D capital are significant and plausible, both within own-area and across neighboring areas as well as within own-industry, but they are weaker across different industries.
    JEL: C21 O30 O32 O47
    Date: 2008–12
  12. By: Germà Bel (Faculty of Economics, University of Barcelona); Melania Mur (Universidad de Zaragoza)
    Abstract: The aim of this paper is to analyze the effects of intermunicipal cooperation and privatization on the delivery costs of urban solid waste services. The results of our empirical analysis, which we conducted among a sample of very small municipalities, indicate that small towns that cooperate incur lower costs for their waste collection service. Cooperation also raises collection frequency and improves the quality of the service in small towns. By contrast, the form of production, whether it is public or private, does not result in systematic differences in costs. Interestingly, the degree of population dispersion has a significant positive relation with service costs.No evidence of scale economies is found because, it would seem, small municipalities exploit them by means of intermunicipal cooperation.
    Keywords: local government, intermunicipal cooperation,privatization, contracting-out, solid waste collection.
    Date: 2008–12
  13. By: Nistor, Adela; Florax, Raymond J.G.M.; Lowenberg-Deboer, Jess; Brown, Jason P.
    Abstract: Replaced with revised version of paper 03/06/08.
    Keywords: corn, drainage, precision agriculture, spatial panel model, Crop Production/Industries, Land Economics/Use, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods, O18, Q18, R15, R38, R58,
    Date: 2008
  14. By: Stephan, Andreas (Jönköping International Business School); Badunenko, Oleg (German Institute for Economic Research, DIW Berlin); Fritsch, Michael (Friedrich Schiller University Jena)
    Abstract: This paper investigates the factors that explain the level and dynamics of productive efficiency of a manufacturing firm. In our empirical analysis, we use a unique sample of about 39,000 firms in 256 industries from the German Cost Structure Census over the years 1992–2005. We estimate the efficiencies of the firms and relate them to firm-specific and environmental factors. <p> We find that (1) about half of the model’s explanatory power is due to industry effects, (2) that firm size accounts for another twenty percent, and (3) that the headquarters’ location explains approximately fifteen percent. <p> Interestingly, most other firm characteristics such as R&D intensity, outsourcing activities or the number of owners have an extremely small explanatory power. Surprisingly, our findings suggest that higher R&D intensity is associated with being less efficient, though higher R&D spending increases a firm’s efficiency over time.
    Keywords: Frontier analysis; determinants of efficiency; firm performance; industry effects; regional effects; firm size
    JEL: D24 L10 L25
    Date: 2008–03–25
  15. By: Jos van Ommeren (VU University Amsterdam)
    Abstract: According to economic theory, there are no strong reasons to tax (or to subsidise) residential moves, although low levels of taxation may be potentially justified to deal with the presence of externalities and economic stability. This is in contrast to practise in most countries where governments have created strong barriers to moving (transaction taxes, rent control) which induces substantial transaction costs. Likely, the welfare losses due to these government-induced transaction costs are substantial.
    Keywords: Housing market; residential mobility; transaction costs; transaction taxes; rent control
    JEL: R21 R23
    Date: 2008–10–17
  16. By: Brooks, Lara; Whitacre, Brian; Muske, Glenn; Woods, Mike
    Abstract: This paper studies €ܥntrepreneurial communities€ݠusing both quantitative and qualitative data from the state of Oklahoma. Household-level survey data and community-specific characteristics are used to determine what factors affect whether a rural community operates in an entrepreneurial manner. Case studies from successful rural communities provide a more qualitative viewpoint of the factors that lead to entrepreneurial activity.
    Keywords: Entrepreneurship, communities, rural development, Community/Rural/Urban Development, R11, O18, C1,
    Date: 2008
  17. By: Dean Baker
    Abstract: This report states that bringing about the rapid adjustment of house prices to trend levels is the best means of returning stability to the housing market. The paper also calls for the restriction of GSE capital in bubble-inflated markets, with the intent of forcing house prices in these areas to return to trend level. The removal of capital from bubble markets and the consequent infusion of loans into non-bubble markets would stabilize prices in these areas, thus preventing a downward price spiral and overshooting of trend-level prices on the negative side. The report also advocates mortgage appraisal based on a price-to-rent ratio of 15 to 1. As well, the paper suggests giving families facing foreclosure the right to rent their homes both to keep them in their houses and offer banks real incentives to avoid foreclosure.
    Keywords: housing bubble, home prices, household wealth, right to rent
    JEL: R21 L85 O51 E E21
    Date: 2008–12
  18. By: Pieter A. Gautier (VU University Amsterdam, and CEPR); Yves Zenou (Stockholm University and Research Institute of Industrial Economics, Sweden)
    Abstract: We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labor-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the initial wealth difference, blacks cannot afford cars while whites can. Car ownership allows whites to reach more jobs per unit of time and this gives them a better bargaining position. As a result, in equilibrium, blacks end up with both higher unemployment rates and lower wages than whites. Furthermore, it takes more time for blacks to reach their jobs even though they travel less miles. Those predictions are consistent with the data. Better access to capital markets or better public transportation will reduce the differences in labor market outcomes.
    Keywords: Transportation; mismatch; job search; spatial labor markets; multiple job centers; ethnic minorities
    JEL: D83 J15 J64 R1
    Date: 2008–11–03
  19. By: Julio Romero P
    Abstract: En este trabajo se estudia la transmisión de la política monetaria a las diferentes regiones de un mismo país a través de la tasa de interés. Una de las razones por la cual hay un efecto regional en la política monetaria, es porque diferentes condiciones económicas determinan distintas capacidades de respuesta a un mismo impulso de política. En este sentido, es totalmente válido preguntarse si los departamentos colombianos reaccionan de la misma forma a un choque monetario. La evidencia no descarta la presencia de efectos regionales de la política monetaria en Colombia. Dicho efecto se presenta en el corto plazo y luego desaparece en el largo plazo.
    Date: 2008–10–23
  20. By: Olaf Jonkeren (VU University Amsterdam); Erhan Demirel (VU University Amsterdam); Jos van Ommeren (VU University Amsterdam); Piet Rietveld (VU University Amsterdam)
    Abstract: According to economic theory, imbalances in trade flows affect transport prices because (some) carriers have to return without cargo from the low demand region to the high demand region. Therefore, transport prices in the high demand direction have to exceed those in the low demand direction. This implies that transport costs, and therefore trade costs, are fundamentally endogenous with respect to trade imbalances. We study this effect using transport prices for the inland waterway transport market in north-west Europe. We find that imbalances in trade flows have substantial effects on transport prices. We estimate that a one standard deviation increase in the trade imbalance from region A to region B decreases transport prices from A to B by about 8 percent.
    Keywords: Imbalances in trade flows; trade costs; inland waterway transport market
    JEL: R41
    Date: 2008–09–17
  21. By: van Ommeren , Jos; Fosgerau, Mogens
    Abstract: This paper applies a dynamic search model to estimate workers' marginal costs of commuting, including monetary and time costs. Using data on workers' job search activity as well as moving behaviour, for the Netherlands, we provide evidence that, on average, workers’ marginal costs of one hour of commuting are about 17 euro
    Keywords: On-the-job search; Job moving; Commuting time; Commuting cost; Willingness-to-pay
    JEL: J32 R20
    Date: 2008
  22. By: David Stadelmann; Reiner Eichenberger
    Abstract: Rational individuals know that present government debts transform into higher future taxes. The Ricardian equivalence implies that the burden of the debt is not shifted between generations because of compensating intergenerational transfers. While the assumptions for Ricardian equivalence to hold are quite demanding, we argue that there exists another equivalence mechanism which works also with non-altruistic individuals: Public debts capitalize into property values. Thus, communities with larger net debts exhibit, ceteris paribus, lower property prices. We provide empirical evidence for debt capitalization using unique data for the Swiss metropolitan area of Zurich.
    Keywords: Capitalization; Public Debts; Ricardian Equivalence; Taxes; Local Public Goods
    JEL: H74 R51 H00
    Date: 2008–11

This nep-geo issue is ©2008 by Vassilis Monastiriotis. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.